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Global supply chains and trade policy

Emily J. Blanchard, Chad P. Bown, Robert Christopher Johnson, Emily J. Blanchard, Chad P. Bown and Robert Christopher Johnson
Authors registered in the RePEc Author Service: Chad P. Bown () and Emily J. Blanchard ()

No 7536, Policy Research Working Paper Series from The World Bank

Abstract: How do global supply chain linkages modify countries'incentives to impose import protection? Are these linkages empirically important determinants of trade policy? To address these questions, this paper introduces supply chain linkages into a workhorse terms-of-trade model of trade policy with political economy. Theory predicts that discretionary final goods tariffs will be decreasing in the domestic content of foreign-produced final goods. Provided foreign political interests are not too strong, final goods tariffs will also be decreasing in the foreign content of domestically-produced final goods. The paper tests these predictions using newly assembled data on bilateral applied tariffs, temporary trade barriers, and value-added contents for 14 major economies over the 1995-2009 period. There is strong support for the empirical predictions of the model. The results imply that global supply chains matter for trade policy, both in principle and in practice.

Keywords: International Trade and Trade Rules; Rules of Origin; Trade Policy; Trade and Multilateral Issues; Government Policies; Social Analysis; Quality of Life&Leisure; Youth and Governance; National Governance; Disability; Services&Transfers to Poor; Access of Poor to Social Services; Economic Assistance (search for similar items in EconPapers)
Date: 2016-01-19
New Economics Papers: this item is included in nep-agr and nep-int
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Working Paper: Global Supply Chains and Trade Policy (2016) Downloads
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